Sugar production in Ukraine could fall to 1 mln tonns

Ukraine’s sugar production in the new season could be lower than previously expected. Ukrtsukor had earlier forecast output at around 1.2 mln tons, but the estimate could be reduced by another 100–200 thsd tons due to deteriorating sugar beet conditions. Last season’s record results are unlikely to be repeated.

Ukraine planted 162 thsd ha of sugar beet this year, but around 159 thsd ha remained by August following weather-related losses. Spring frosts and subsequent adverse weather affected crop conditions, while harvesting is expected to start approximately two weeks later than usual.

At the same time, the current season has been much stronger for exports than initially expected. As of August 7, Ukraine had already exported 622 thsd tons of sugar, compared with around 580 thsd tons during the entire previous season. Major destinations include the EU, Uzbekistan, Lebanon and Syria, while Ukraine has managed to regain access to Central Asian markets amid disruptions to alternative supplies through the Strait of Hormuz.

Further exports are being complicated by problems at Ukrainian ports. Seaborne shipments to Lebanon, Syria and other traditional buyers are now at risk, while rail transportation via Constanța costs around $50/t more. As a result, the EU and Western Balkan markets, which can be reached by land, are becoming increasingly important for Ukrainian sugar exporters.

Meanwhile, producers expect domestic prices to recover after two seasons of oversupply. The current wholesale sugar price is around UAH 22.6/kg, while production costs for the new season are estimated at about UAH 30/kg. According to Ukrtsukor, producers would need prices of around UAH 32–35/kg to achieve minimum profitability.

Tags: Ukraine, sugar